Friday, January 26, 2018

The Law of Demand Applies to Nutella

. . . Even in France!  In Chapter Five of my book Foundations of Economics I explain that what economists call the Law of Demand is an implication of the Law of Marginal Utility. Because the marginal utility of a good decreases as the quantity we have increases, in order for people to demand a larger quantity, the price must be lower. I write, therefore that the Law of Demand tells us that "there is an inverse relationship between the hypothetical price of a good and the quantity of that good a person will buy."

A manifestation of this law played itself out earlier today in Intermarche stores throughout France. The BBC reports:

Intermarché supermarkets offered a 70% discount on Nutella, bringing the price down from €4.50 (£3.90) to €1.40. But police were called when people began fighting and pushing one another. "They are like animals. A woman had her hair pulled, an elderly lady took a box on her head, another had a bloody hand," one customer told French media. A member of staff at one Intermarché shop in central France told the regional newspaper Le Progrès: "We were trying to get in between the customers but they were pushing us."
Sometimes if the price falls significantly for something people really like, bedlam can ensue. This is what an increase in quantity demanded looks like:

Tuesday, January 23, 2018

Bettina Bien Greaves, RIP

Bettina Bien Greaves has died at age 100. She was an important figure at the Foundation for Economic Education and later a supporter and friend of and contributor to the Ludwig von Mises Institute. She attended Ludwig von Mises's seminars at New York University and became a valuable assistant to Mises for the rest of his life. She also made scholarly contributions of her own, including the important Mises Bibliography.

You can read an important an interview she did for the Austrian Economics Newsletter in 1998 by clicking here.

Monday, November 6, 2017

Herbener Contributes to New Book on the Theory of Costs

My friend and department Chairman Jeff Herbener has a chapter included in the new book The Economic Theory of Costs: Foundations and New Directions edited by Matt McCaffrey and published by Routledge. Herbener's chapter is entitled "Time and the Theory of Cost" The abstract reads as follows:

Production costs in Neoclassical models account for the physical conditions of production (MPP) and consumer demands (MR) but fail to incorporate time across the structure of production. Incorporation of real time in production necessitates the recognition that capitalist-entrepreneurs make production decisions. They discount the MRPs of factors when buying them in advance of selling their output and they must speculate about the DMRPs of factors in the face of uncertainty of the future when deciding what they will pay for them. This chapter develops a theory of cost in light of capitalist-entrepreneurs acting in real time.

It is a joy to work with colleagues who continue to add to our understanding of the laws of economics--laws that declare the glory of the Lord.

Friday, September 22, 2017

Herbener on The Tom Woods Show on The Standard of Living

My friend and Department Chairman, Jeffrey Herbener, was on the Tom Woods Show talking about the American standard of living. Is it falling, and will our children will be worse off than we are? Herbener and Woods talk about it.

Saturday, August 12, 2017

Socialism: Dream and Reality

I was again asked to be a guest on the program A Plain Answer on the Redeemer Broadcasting network. Host Dan Elmendorf and I applied both economics and Christian ethics in considering the dream versus the reality of Socialism. There was even a bit of the Westminster Longer Catechism thrown in. A good time was had by all. You can listen to the half-hour program by clicking here.

Thursday, August 10, 2017

Not Dead, but Deadening

Alas, the dream of socialism is not dead. A perusal of the on-going New York Times series "The Red Century" reveals that well enough. One contribution to the series calls for a revival of socialism--this time it really will be more democratic, kinder, and gentler. It has been reported that membership in the Democrat Socialists of America is at an all-time high.

Before we giddily embrace socialism as the cure for our economic ills, we should be very aware of what we would be in for if we did. Watch the presentation below and be instructed. Rafael Acevedo and Luis B. Cirocco told the sad tale of their own nation Venezuela at the most recent Mises University at the Ludwig von Mises Institute in Auburn, Alabama.

Please don't be fooled by the siren song of socialism. It leaves poverty, starvation, and death in its wake.

Sunday, June 4, 2017

Ritenour on A Plain Answer

Dan Elmendorf and I discussed issues relating to personal finance that my wife and I learned relatively early in our marriage that helped us avoid some financial pitfalls on this week's episode of A Plain Answer. It is a program on the Redeemer Broadcasting Network. You can listen to the podcast of the program by clicking here.

Although most of the time we discuss personal finance issues, we do talk about the effects of the Federal Reserve holding interest rates down so low for so long (Hint: they are not good). We also talk briefly about President Trump's economic policy decisions thus far.